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More Corporations Are "Greening" Supply Chains
Ben Block, 30 Sep 09

Seagatefactory.jpg
Savvy business sometimes requires only a flip of a lid.

When Stonyfield Farm switched from plastic to foil lids six
years ago, the organic yogurt company avoided 16 percent of the energy costs
associated with producing its containers.


Similar savings have been discovered throughout Stonyfield's
manufacturing, transportation, and packaging divisions since the company began measuring
its carbon footprint in the early 1990s, according to Chairman Gary Hirshberg.


"Our carbon footprint is everywhere we look. It's our
transportation. It's our waste," Hirshberg told a conference
of business executives
in Boston,
Massachusetts, earlier this
month. "We're sending our money into the dark sky. That's clearly dollars to be
reclaimed."


For many companies, sustainability improvements such as
energy and water efficiency were at first reactions to public criticism.
Nowadays, as rising energy costs, water scarcity, and climate change threaten
the affordability and availability of global inputs, corporations are
recognizing that a more sustainable product has a better chance of remaining
competitive in a resource-constrained world.


But a product's environmental or economic sustainability
rarely depends on the actions of a single company. As a result, many
corporations are pressuring their suppliers to become more efficient as well.


"Everyone is scrutinizing for higher sustainability efforts
because companies are asking for it," said Paul Baier, a vice president with
the consulting firm Groom Energy.
"Clearly, it's become mainstream business."


Walmart represents the most dramatic example of efforts to
"green" corporate supply chains. The world's largest retailer announced in July that many of
its suppliers would need to assess and report on the environmental and social
sustainability of their products. The responses may eventually be combined into
an index of a product's lifecycle impact, the company said.


Since Walmart notified its suppliers about the request - asking whether
the companies had evaluated environmental impacts such as greenhouse gas
emissions, water use, and product recyclability - several suppliers have increased their investments in measuring carbon emissions and energy efficiency, Baier said.


The motivation for corporations like Walmart to improve the
efficiency of supplier industries is in part financial. Improved efficiency can
be an important component of business deals between suppliers and retailers.
Depending on the agreement, the avoided energy costs are shared between the two
companies. Both supplier and buyer increase profits while the overall supply
chain becomes more efficient.


"When you're speaking sustainability with business people,
you have to speak the language," said Richard Goode, head of climate change
programs for Alcatel-Lucent, a global telecommunications company. "The language
has always been profitability."


David Newman, a sustainability director for Millipore
Corporation, said the Massachusetts-based bioscience manufacturer has reduced
its energy consumption 12 percent since it started measuring emissions in 2006.
Still, Newman questions whether the additional sustainability push from outside
businesses and organizations will boost profits for his company.


"The vision...can't just be to reduce the environmental cost
of our supply chain," Newman said. "That's an admirable goal, but it's not the
best goal from a business perspective."


Corporations are also pushing sustainability to mitigate the
environmental risks associated with their products. The growing scarcity of
arable land, clean water, and cheap energy may threaten the availability of products
ranging from t-shirts to soft drinks, especially as climate change shifts
agricultural patterns.


"If climate change takes place as many scientists are
projecting and parts of the supply chain will no longer be available, companies
want to know whether suppliers are recognizing this and taking action to ensure
for the survival of their products 30 years from now," said Dan Kreeger,
executive director of the Association of
Climate Change Officers
, an organization for corporate sustainability
officers.


"Cadbury's is worried about where it'll get its chocolate
and Coca-Cola is worried about where it'll get its water," said Gwen Ruta, vice
president of corporate programs at the Environmental
Defense Fund
.


Peer pressure has also led more companies to volunteer emissions data
through the independent Carbon Disclosure
Project
, which reports corporate emissions from electricity usage as well
as the direct burning of fossil fuels. The group announced
last week
that a record 409 of the world's 500 largest companies responded to
its latest request-an increase from 383 last year.


"If you're not doing CDP, I strongly recommend it,"
Hirshberg told the conference. "If today [reporting emissions] is not mandated,
tomorrow I guarantee it will be."


Beginning this year, the Carbon Disclosure Project has
attempted to expand its inventory to smaller companies that supply many of the
world's largest corporations. While many of these companies remain unsure of how
to analyze their emissions, the quality of responses is improving, said Chrystina Gastelum, U.S. account manager for the
group's supply chain inventory.


"It requires a lot of technical data," Gastelum said. "There
is not a lot of expertise [among the companies]."


Corporations are also instructing suppliers to validate all
sustainability improvements through outside auditors. Large companies are increasingly
sensitive to being perceived as "greenwashing," the notion that environmental
improvements are advertised disproportionately to distract from other, polluting,
activities.


"If we are going to communicate to the public, you need to
have someone standing behind you, saying you did it the right way," said David
Walker, director of environmental sustainability for PepsiCo.

Ben Block is a staff writer with the Worldwatch Institute. He can be reached at bblock@worldwatch.org. This article is a product of Eye on Earth, Worldwatch Institute's online news service.

Image credit: Robert Scoble, Creative Commons

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Comments

Brilliant that major corporations like Walmart are jumping on this and expecting it out of their suppliers as well. Why not submit to things like CDP's and start the process for your company now before it becomes mandated and you are left behing the eight ball.
Glad that corporations are wisening up and seeing that you can both do good for the environment & the resources and be profitable at the same time.
The energy corporation has been involved for quite some time now. For more info on clean energy visit - http://titanenergyworldwide.com/

Great post!


Posted by: John - TitanEnergyWorldwide on 1 Oct 09

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